How to save money on car insurance

Getting the best price for the protection you need with your car insurance

First, choose the right type of cover

The cheapest car insurance isn’t always the best! Before you look for ways to save, make sure you’re choosing the right type of car insurance for your situation. The cheapest premium can cost you more in the long run if it leaves you exposed.

Australia has the following types of car insurance:

1. Compulsory Third Party (you have to have this insurance)
2. Third Party Property Damage
3. Third party property damage, fire and theft
4. Comprehensive

Learn about the different types of car insurance and how to choose what’s right for you. Once you know what you need, you can find ways to make it cheaper.

Tip: Know who you're buying from

Before you start comparing, it helps to know who you’re buying from. The insurance brand is the name you see in ads and on your policy - they handle quotes, updates and claims. Behind them is the underwriter, the licensed insurer that takes on the financial risk and pays approved claims.

The same underwriter might sell policies with identical cover at different prices under different brand names. When comparing policies, it's always important to check exactly what you're covered for.

If you use a comparison website to shop for a policy, be aware that insurance comparison websites are usually paid by the insurers they compare. That means they don’t include all the insurance products on the market. It may look as if they're doing all the work for you, but if you only use one website, you may not be getting all the information you need to make an informed decision.

Common car insurance discounts

Some automatic discounts you might get include: 

Online discounts – If you take out your policy online, you may receive a discount on the premium. This is usually for your first period of insurance only.

No claim bonus - Some policies include a no claim bonus. This means you pay a lower premium if you don't make a claim for a certain time. 

Multi-policy discounts - Some insurers will offer a discount on the cost of your insurance if you have more than one insurance policy with them. For example, you might have your CTP insurance, your comprehensive car insurance and home and contents insurance.  

New customer discounts - Insurers are often keen to attract new customers and might offer a discount for the first year of the policy, or complimentary extra cover (for example, free roadside assist) to attract your business.  

Family Discounts - Some insurers may offer you a family discount if you are under 25 years old and your parents are also insured with the same insurer.

Loyalty Discount - Some insurers will offer you a discount for staying with them a long time. A loyalty discount usually only applies after you have been with the same insurer for a minimum number of years and increases the longer you are with them.

4 extra ways to save on car insurance

Don’t just assume that any automatic discounts are all you can get – there are 4 other key actions you can take to potentially save money.

1. Read your policy documents

Renewal notices often don’t tell customers much about how to reduce their premium. This information is usually in the Additional Information Guide or Premium, Excess and Discounts Guide that comes with the renewal. It's important to read everything your insurer sends you to find out where you can save money.

2. Tweak your current cover

If you haven’t looked at your insurance for a while you could be paying for things you don’t need! Like, younger drivers, or extra features you wouldn’t use/could get elsewhere. For example:

• hire car
• accommodation
• roadside assistance

Increasing your excess will also reduce your premium. Be careful, though – remember that you will need to be able to pay the excess if you make a claim.

3. Call your insurer and ask for a discount

Five key questions to ask your insurer are:

• Can you match or beat a competitor’s quote?
• Am I getting all the discounts I’m eligible for?
• Is there a cheaper option with a different excess?
• Can I remove extras I don’t need?
• Has anything changed in my profile that should lower my premium? (e.g., driving less, moving to a safer suburb, secure parking, additional safety features)

If your current insurer won’t budge, it’s worth doing some market research.

4. Compare insurers before you renew

Remember – there’s a difference between the brand you’re buying from and the underwriter. Your ideal policy might be available from a few different places, for a few different prices.

Use our checklist to work through what to compare across different insurance policies.

Not sure where to start? Try the Insurance Council’s ‘find an insurer’ service to make a shortlist to compare.